Sun
Nov 20 2022
06:42 am

The Internal Revenue Service announced the tax year 2023 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes.

  • "The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year.
  • For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900,
  • and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.

Marginal Rates: For tax year 2023,
"the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly)."

The other rates are:

  • 35% for incomes over $231,250 ($462,500 for married couples filing jointly);
  • 32% for incomes over $182,100 ($364,200 for married couples filing jointly);
  • 24% for incomes over $95,375 ($190,750 for married couples filing jointly);
  • 22% for incomes over $44,725 ($89,450 for married couples filing jointly);
  • 12% for incomes over $11,000 ($22,000 for married couples filing jointly).
  • 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).

The 7.1% adjustment is one of the biggest in decades, and more than twice what it was in 2022.

"While the changes affect everyone, they particularly have an impact on people whose income did not keep pace with inflation this year"

In addition, contribution limits for 401(k)s, IRAs, and HSAs have increased.

These tax changes in addition to the possibility of record high increases in paychecks can be very beneficial.

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